Attitudes to Inequality: A Cohort Perspective

1. Attitudes to inequality: a cohort perspective Márton Medgyesi, TÁRKI, Social Research Institute GINI Project, Year 1 Conference 4-5 February, 2011, University of Milan

2. Research questions • How do valuation of inequalities respond to differences in inequality? • Analyze whether there is convergence of attitudes between ex-socialist and market economies. Are younger cohorts (of ex-socialist and market economies) more similar in their attitudes than older cohorts?

3. Theoretical arguments Effect of inequality on attitudes to inequality Level of inequality: • If there is universal norm about level of acceptable inequality: we will see higher frustration in countries with higher inequality. • Not very likely: countries differ in their values, inequality aversion. • How inequality comes about might also matter for the evaluation of current inequalities (fairness of the process that generates inequality). • If attitudes adapt to real situation: changes might matter more than levels! Increasing inequality: • Relative deprivation theory: asserts that people dislike rising inequality if it means a deterioration of their relative position compared to their reference group. • People tend to accept increasing incomes of others (rising inequality) if this informs them about a likely improvement of their own situation in the near future (Hirschman, 1973).

4. Theoretical arguments (2) Convergence of attitudes • After the transition process ex-socialist countries became more similar to market eonomies. Inequality levels before transition were lower, then sharp increase in the begining of ’90s for ex-socialist countries, now they have more similar inequality levels. • Is a convergence of attitudes taking place? Convergence can happen: • by uniform shift of values: eg. if values adapt to the actual situation, than inhabitants of ex-socialist countries would (with a certain time lag) accept higher levels of inequalities. • by cohort replacement: more egalitarian older cohorts will be replaced by younger cohorts more willing to accept inequalities. Eg. socialist legacy hypothesis.

5. Empirical results Effect of inequality on attitudes: results dependent on data and measurement • Lubker (IntLabRev, 2004): significant effect of Gini in country-level regression, • Hadler (ActaSoc, 2005): no effect of Gini in multilevel model based on ISSP 1999 data. • Murthi and Tiongson (WB, 2008): significant effect of Gini, WVS wide country coverage • Yaish and Andersen (2011):significant effect of Gini in multilevel model. Socialist legacy hypothesis:

6. Data and measurement • Data from: Eurobarometer Survey On Poverty And Social Exclusion (Special Eurobarometer 321 / Wave 72.1)September 2009. • Dependent variable: „nowadays in (our country) income differences between people are far too large” (4-point scale). • Inequality indicators: EU-SILC UDB 2008, data on incomes for year 2007.

7. Individual factors explaining attitudes towards inequalities Self-interest: • Static view: those with higher incomes accept higher levels of inequality • Dynamic view: those expecting upward mobility accept higher levels of inequality Measurement: • Employment status: employed, self-employed, not working • Material status index: index based on ownership of durables (TV, DVD player, music CD player, computer and car). • Subjective status:respondent’s own description of the situation of the household as “poor”, “rich” or “neither poor nor rich” • Future expectations: expectations of financial situation of household in the next twelve month: „better”, „worse”, „the same” Also controlling for: gender, age, schooling, type of settlement, household type, household size, no. of children, country dummies

8. Attitudes towards inequalities in EU countries, 2009Agreement with the statement: „In your country inequalities are far too large”

9. Actual inequality and attitudes towards inequalities Gini coefficient P90/P10

10. Actual inequality and attitudes towards inequalities (2) Poverty rate MDMI

11. Effect of contextual variables (1): coefficients from ordered logit model (clustered se, individual controls included)Dependent variable: agreement with „Inequalities are too large” (4point scale)

12. Effect of contextual variables (2): coefficients from multilevel random intercept logit model (individual controls included)Dependent variable: % totally agreeing that inequalities are too large

13. Effect of explanatory variables (ordered logit, average partial effects on the probability of „totally agree”)

14. Interaction of cohort&country type

15. Conclusions • Attitudes to inequality are not very sensitive to inequality in cross-section of countries. • The poverty rate is the only significant inequality indicator, but it has a weak effect. • Inhabitants of former socialist countries have a higher aversion to inequality (individuals of same characteristics living in ex-soc. countries more often describe the same level of actual inequality as too large than individuals in market economies). • Researchers tend to interpret such findings as a lasting effect of socialist ideology and/or of habit of low inequality (socialist legacy hypothesis). • Our results show that younger cohorts, who were not subject to to socialist indoctrinaton and could not get acustomed to low inequality are just as different from their „western” counterparts as individuals in older cohorts are. • Consequently, convergence in attitudes to inequality between ex-socialist and market economies is unlikely to happen by cohort replacement. • Work in progess. Comments welcome!